At lease that is the argument made by the fellow in the video below. And he is right. Most of the previous bear markets have been ushered in by the FED tightening. For instance, 2000 and 2007 bear legs are a good example.
With that in mind, it is really different this time. The stakes are much higher. The FED has maxed out its capability to wage war on recession through QE and keeping interest rates at zero over the last 8 years. We now live in the world where a fear of a laughable 25 bps rate hike can send the Dow down 2,000 points in 2 trading days. Plus, when the economists begin to warn that the health of the World Economy is dependent on the FED not raising interest rates, Fed should wait with raising rates: World Bank economist, we are in trouble. Bit time.
In other words, don’t for a second think that we are in a normal business cycle or macro environment here. We are not. The FED went all in. The only question is……will the bet pay off or will this house of cards come crashing down……fast? We should know soon.
